The IMF had earlier raised its global GDP growth forecast for 2025 in its World Economic Outlook to 3.2% from 3.0% forecast in July, but warned that a renewed trade war between the United States and China threatened by Trump could slow production significantly.
Also supporting global growth is the fact that the US effective tariff rate has fallen from previous estimates, Georgieva said at the Bretton Woods Committee event. After calculating that Trump’s tariffs announced in April would average 23%, the rate was lowered by U.S. trade deals with the European Union, Japan and other major partners to about 17.5%, he said.
“The effective tariff, however, what is being collected when you get exemptions to accommodate the need for the economy to function well, we estimate them to be somewhere between 9% and 10%, so the burden is more than two times less than we thought it would be,” he added.
Other factors that have supported the global economy have been the improvement of countries’ policies to promote private sector development and a more efficient allocation of resources, as well as the agility of companies to avoid the worst effects of tariffs, advancing imports and quickly reorganizing supply chains.
However, he said resilience could also be tested by lofty valuations in global markets, especially the technology sector, which has fueled a stellar market rally this year.
“It’s a very big bet,” he said. “If it recovers, great, then our problem of low growth will be gone, because we will see an increase in productivity and we will see an increase in growth. What if it takes a while or doesn’t happen at all? What then?”
IMF chief economist Pierre-Olivier Gourinchas previously told Reuters that the AI investment boom could trigger a dot-com crash similar to the 2000 dot-com crash that burned equity investors, but would likely not lead to a systemic crisis because it has not been largely financed by debt.
